Have Extra Rooms to Rent?
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Are you considering renting out your extra space? This week, we explore the potential risks and precautions you should consider before renting out your extra rooms. Watch the video to learn more!
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Transcription:
We hope you’re having a fantastic day. I’ve gotten this question several times lately. And so I want to cover some of the basics. The question is, hey, I’ve got a couple of extra rooms that are open and I’m not using them in my practice is it okay to sublease these or to lease these rooms out to other healthcare providers or other providers? The short answer is probably, first of all, I would ensure you that you want to check your current lease. If you’re leasing your property, make sure that you can sublet those particular open rooms, make sure it’s allowable under your lease. If not have a conversation with an attorney and see what kind of an addendum you can get done to allow you to do that subleasing.
But beyond that, there is a key phrase that you’re going to want to make sure that you notate it’s this fair market value, it’s going to drive the entire conversation from a compliance perspective. What you don’t want to ever have happen in this situation where you have another provider in is run into a kickback situation. So odds are if you have another provider in there, there will most likely end up being some level of referral, one way or another, or both directions for that matter. And so you’ve got to make sure that there is no remuneration at all, in any way, shape, or form. For any referrals with anybody at all, let alone somebody you’re subleasing. So the problem when you’re leasing those particular rooms to individuals, is you want to make sure that that that rent is fair market value. If it’s higher than fair market value, then it’ll appear that they are giving you some sort of a kickback. For that referral, if it is lower than fair market value, then it’ll appear if you are giving them a kickback. And so you want to make sure that that that rental amount is at fair market value. If you’re not sure what that is contact, potentially a local real estate agent and somebody who is very familiar with the commercial real estate property in your specific area, they can help determine that now.
If you’re wondering, okay, what are the chances? Well, there actually are a number of cases that have happened over the course of time, a used to happen all of the time surrounding mobile diagnostic companies who would come in and rent rooms at an exceedingly high rental rate that was in the courts deem this to be a kickback and a licensed discipline, other fines and penalties, federal statutes violated definitely problems that you don’t want to have in your practice. So make sure that that rent is fair market value, anything that’s on a percentage basis, is also going to create a problem. So if it’s on a percentage of the funds that they bring in, that is going to be a problem. They can actually pay for the services that you’re providing. If you’re providing services related to maybe reception work, or potentially billing if that’s something you’re handling for them. You know, all of those things can be taken into consideration when you’re developing the rental, but ensure that you don’t exceed that fair rental value.
The last thing is from a business perspective, just double-check with all of your different insurers, both your general liability insurer, as well as your malpractice insurer, to see if you need any kind of rider. You’re going to have other providers within the same building that you’re leasing to just make sure that you have the appropriate coverage for that to your general liability insurer as well as your malpractice. Hopefully, this information helps you out we will catch you next week.
